federal discovery in the proportionality era - for brown ... 1 basic principles, ... expense of the...

4/15/2015

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Basic Principles, Practical Implications

Honorable Peter G. Sheridan, U.S.D.J.Honorable Michael A. Shipp, U.S.D.J.

Honorable Tonianne J. Bongiovanni, U.S.M.J.Honorable Douglas E. Arpert, U.S.M.J.

Vincent E. Gentile, Esq. (Drinker Biddle & Reath)William F. Cook, Esq. (Brown & Connery)

Overview of rule changes expected for

December 2015

Understanding “proportionality”

Practical impact of the new Rule 26(b)(1)◦ Document requests

◦ Interrogatories

◦ Depositions

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Rule 37(e) – ESI

Additional changes

Rule 1: Scope and Purpose

Rule 4(m): Time for Service; “Appendix”

Rule 16(b): Scheduling

Rule 26(b): Scope of Discovery

Rule 26(c): Protective Orders

Rule 26(d): Early document requests

Rule 26(f): Joint Discovery Plan

Rule 34: Document Requests

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Rule 37(e): Failure to Provide Preserve ESI

Rule 55(c): Setting Aside a Default or a DefaultJudgment

Rule 84: Forms

Appendix of Forms

Rule changes will go into effect onDecember 1, 2015

(assuming Supreme Court approvalby May 1, 2015 and no action by

Congress)

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Mounting complaints about cost, delays andburdens of civil litigation in federal courts

Average outside litigation cost per Fortune 200company was nearly $115 million in 2008, up 73%from percent from $66 million in 2000

1000:1

◦ Ratio of pages discovered to exhibit pages

Civil Justice Reform Group, et al.,“Litigation Cost Survey of Major Companies”

81% of ACTL Fellows agreed that the civil justice system istoo expensive

69% of Fellows said that the civil justice system takes too long

68% of Fellows agree that the potential of litigation costsinhibits the filing of civil cases

“There is a serious concern that the costs and burdens ofdiscovery are driving litigation away from the court systemand forcing settlements based on the costs,

as opposed to the merits, of cases.”

ACTL & IAALS, Interim Report on the Joint Project of the American College of TrialLawyers Task Force on Discovery and the Institute for the Advancement of theAmerican Legal System (2008)

Late 2008: Standing Committee asks AdvisoryCommittee to hold a conference on the issues of costand delay in the federal civil-litigation system

January 2009: Advisory Committee schedulesconference to be held at Duke University School ofLaw in May 2010 to determine whether it isnecessary to “totally rethink the current approachtaken by the civil rules to litigation.”

Hon. John Koeltl, “Progress in the Spirit of Rule 1,” 60 DukeL.J. 537 (2010); Mary Kay Kane, Pretrial Procedural Reformand Jack Friedenthal, 78 GEO. WASH. L. REV. 30, 38(2009).

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Two-day conference with eleven panels attended by judges,lawyers, academics, and users of the system, includinggovernment, corporations, and groups representing individuallitigants and public interest causes

Scores of articles, studies, and commentary submitted

“[N]early unanimous agreement that the disposition of civilactions could be improved, reducing cost and delay, byadvancing cooperation among the parties, proportionality inthe use of available procedures, and early and active judicialcase management.”

Hon. John Koeltl, “Progress in the Spirit of Rule 1,” 60 DukeL.J. 537 (2010); Advisory Committee Report to StandingCommittee, May 2014.

Advisory Committee prepares rule proposals; vetsthem at “mini-conferences”

August 2013: Standing Committee approvespublication of “Duke Package”

Maximum capacity hearings in Washington, D.C.,Phoenix, and Dallas

120 testifying witnesses

Thomas Y. Allman, “The Civil Rules Package As ApprovedBy the Judicial Conference” (September 18, 2014)

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Over 3200 written comments

Includes extensive comments from the Lawyersfor Civil Justice (“LCJ”), American Associationfor Justice, the Federal Magistrate JudgesAssociation, the Association of CorporateCounsel, the Department of Justice, and theSedona Conference®

Thomas Y. Allman, “The Civil Rules Package AsApproved By the Judicial Conference” (September 18,2014)

April 2014: Advisory Committee reviews andfinalizes proposals; recommends adoption

May 2014: Standing Committee acceptsrecommendations of Advisory Committee

September 2014: Judicial Conference acceptsrecommendations; submits to Supreme Court foradoption

Report of the Advisory Committee on Civil Rules (May2014); Thomas Y. Allman, “The Civil Rules Package AsApproved By the Judicial Conference” (September 18, 2014)

Rules currently pending before Supreme Court

If the rules are adopted and submitted toCongress prior to May 1, 2015, they wouldbecome effective on December 1, 2015 iflegislation is not adopted to reject, modify, ordefer them

Thomas Y. Allman, “The Civil Rules Package As ApprovedBy the Judicial Conference” (September 18, 2014)

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Rule 26(b)(1)

Rule 37(e)

Unless otherwise limited by court order, the scope ofdiscovery is as follows: Parties may obtain discoveryregarding any nonprivileged matter that is relevant to anyparty's claim or defense--including the existence,description, nature, custody, condition, and location of anydocuments or other tangible things and the identity andlocation of persons who know of any discoverable matter.For good cause, the court may order discovery of anymatter relevant to the subject matter involved in theaction. Relevant information need not be admissible at thetrial if the discovery appears reasonably calculated to leadto the discovery of admissible evidence. All discovery issubject to the limitations imposed by Rule 26(b)(2)(C).

Scope in General. Unless otherwise limited by courtorder, the scope of discovery is as follows: Parties mayobtain discovery regarding any nonprivileged matterthat is relevant to any party's claim or defense andproportional to the needs of the case, consideringthe importance of the issues at stake in the action,the amount in controversy, the parties relativeaccess to relevant information, the parties’resources, the importance of the discovery inresolving the issues, and whether the burden orexpense of the proposed discovery outweighs itslikely benefit. Information within this scope ofdiscovery need not be admissible in evidence to bediscoverable.

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The proportionality factors located in currentRule 26(b)(2)(C)(iii) are moved up to becomepart of the scope of discovery

The examples recognizing discovery of theexistence of documents or tangible things andthe identity of persons who have knowledge ofdiscoverable matter are eliminated

Advisory Committee Note to Rule 26 (2014); Reportof the Advisory Committee on Civil Rules (May2014)

The current reference to the discovery ofinformation relevant to the subject matter ofthe action, on showing good cause, is eliminated

and….

Advisory Committee Note to Rule 26 (2014); Report ofthe Advisory Committee on Civil Rules (May 2014)

The provision allowing discoveryof inadmissible information

“reasonably calculated to lead tothe discovery of admissible

evidence” is eliminated

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Widespread support at the Duke Conferencethat discovery should be limited to what isproportional to the needs of the case

As to meaning, Advisory Committee borrowsthe factors currently in Rule 26(b)(2)(C)(iii)

Advisory Committee Note to Rule 26 (2014);Report of the Advisory Committee on Civil Rules(May 2014)

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While proportionality has been in Rule 26 since1983, it has not been given proper emphasis;placement in Rule 26(b)(1) will make it moreprominent

“The present amendment restores theproportionality factors to their original place indefining the scope of discovery.”

Advisory Committee Note to Rule 26 (2014); Reportof the Advisory Committee on Civil Rules (May2014)

“Restoring the proportionality calculation toRule 26(b)(1) does not change the existingresponsibilities of the court and the parties toconsider proportionality, and the change doesnot place on the party seeking discovery theburden of addressing all proportionalityconsiderations.”

Advisory Committee Note to Rule 26 (2014)

“Nor is the change intended to permit theopposing party to refuse discovery simply bymaking a boilerplate objection that it is notproportional. The parties and the court have acollective responsibility to consider theproportionality of all discovery and consider itin resolving discovery disputes.”


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The “issues at stake in the action”

The amount in controversy

The parties relative access to relevantinformation

The parties’ resources

The importance of the discovery inresolving the issues

Whether the burden or expense of theproposed discovery outweighs its likelybenefit

“…the parties’ relative access to relevantinformation”

Not currently in Rule 26(b)(2)(C)(iii)

“This factor addresses the common concern that thefrequently asymmetric distribution of informationmeans that discovery often will impose greaterburdens on one party than on another.”

Report of the Advisory Committee on CivilRules (May 2014)

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Current Rule 26:

“including the existence, description, nature,custody, condition, and location of any documents

or other tangible things and the identity andlocation of persons who know of any discoverable

matter.”

“Discovery of such matters is so deeplyentrenched in practice that it is no longernecessary to clutter the long text of Rule 26with these examples.”

“The discovery identified in these examplesshould still be permitted under the revised rulewhen relevant and proportional to the needs ofthe case.”


The distinction between discovery of matterrelevant to the parties’ claims or defenses anddiscovery of matter relevant to the subject matter ofthe action, on a showing good cause, is eliminated.

“The Committee has been informed that thislanguage is rarely invoked. Proportional discoveryrelevant to any party’s claim or defense suffices,given a proper understanding of what is relevant toa claim or defense.”


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The provision allowing discoveryof inadmissible information

“reasonably calculated to lead tothe discovery of admissibleevidence” is eliminated.

“The phrase has been used by some,incorrectly, to define the scope of

discovery.”


“As the Committee Note to the 2000 amendmentsobserved, use of the ‘reasonably calculated’ phraseto define the scope of discovery ‘might swallow anyother limitation on the scope of discovery.’”

The 2000 amendments sought to prevent suchmisuse by adding the word “Relevant” at thebeginning of the sentence, making clear that“‘relevant’ means within the scope of discovery asdefined in this subdivision . . . .”


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“The ‘reasonably calculated’ phrase has continuedto create problems, however, and is removed bythese amendments. It is replaced by the directstatement that ‘Information within this scope ofdiscovery need not be admissible in evidence to bediscoverable.’”

“Discovery of nonprivileged information notadmissible in evidence remains available so long asit is otherwise within the scope of discovery.”


“Information is discoverable under revised Rule26(b)(1) if it is relevant to any party’s claim ordefense and is proportional to the needs of the

case.”


Global discovery versus the individual case

“Relevant” versus “Relevant”

Rule application versus case lawdevelopment

Rule 26(b) and Bell/Twombly

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Current Rule 26(b) Analysis

◦ Discovery is broader than admissibility

◦ Is it reasonably likely to lead to the discovery ofadmissible evidence?

◦ Is it privileged or otherwise protected?

◦ Should probably produce, if not privileged

New Rule 26(b) Analysis

◦ “Information is discoverable under revised Rule26(b)(1) if it is relevant to any party’s claim or defenseand is proportional to the needs of the case.”

◦ “Not Proportional” cannot be used as a boilerplateobjections

◦ Is the document “relevant to any party’s claim ordefense”?

New Rule 26(b) Analysis (cont.)

◦ Document does not have to be admissible

◦ Information may be withheld if privileged or non-responsive

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“The 2000 Note offered three examples of informationthat, suitably focused, would be relevant to the parties’claims or defenses. The examples were ‘other incidents ofthe same type, or involving the same product’;‘information about organizational arrangements or filingsystems’; and ‘information that could be used to impeacha likely witness.’ Such discovery is not foreclosed by theamendments.”



◦ “Discovery that is relevant to the parties’ claims ordefenses may also support amendment of thepleadings to add a new claim or defense that affectsthe scope of discovery.”


Effect on common objections (vague, undulyburdensome)

Use of “not proportional” or “disproportionate”

“Not relevant to any party’s claim or defense”

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During the deposition

Persons/entities to depose

◦ 30(b)(6) Notice

Protective orders

Rule 37(e)

“[I]t is no exaggeration to say that many of themore than 90% of American adults who own a cellphone keep on their person a digital record ofnearly every aspect of their lives—from themundane to the intimate.”

Chief Justice John Roberts,

Riley v. California,

134 S.Ct. 2473 (2015)

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“[M]odern cell phones…are now such apervasive and insistent part of daily life thatthe proverbial visitor from Mars might concludethey were an important feature of humananatomy.”

Chief Justice John Roberts,

Riley v. California,

134 S.Ct. 2473 (2015)

“Nearly three-quarters of smart phone usersreport being within five feet of their phonesmost of the time, with 12% admitting thatthey even use their phones in the shower.”

Harris Interactive, 2013 MobileConsumer Habits Study (June2013)

The duty to preserve evidence is triggered whenit is reasonably foreseeable that the informationwill be requested in litigation.

Once a party reasonably anticipates litigation,it must suspend its routine documentretention/destruction policy and put in place a“litigation hold” to ensure the preservation ofrelevant evidence.

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Counsel must oversee compliance with thelitigation hold, monitoring the party'sefforts to retain and produce relevantevidence.

The “duty to preserve” issue is a questionof law to be determined by the court.

Scott v. IBM Corp., 196 F.R.D. 233 (D.N.J.2000); Major Tours, Inc. v. Colorel, 2009 WL2413631 (D.N.J. Aug. 4, 2009)

Currently, Rule 37(e) provides that, absentexceptional circumstances, “a court may notimpose sanctions under these rules on a partyfor failing to provide electronically storedinformation lost as a result of the routine, good-faith operation of an electronic informationsystem.”

But current Rule 37(e) says nothing abouthow sanctions should be applied in thespecific context of ESI.

Current Rule:

(e) Failure to Provide ElectronicallyStored Information. Absent exceptionalcircumstances, a court may not imposesanctions under these rules on a party forfailing to provide electronically storedinformation lost as a result of the routine,good-faith operation of an electronicinformation system.

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“This limited rule has not adequatelyaddressed the serious problems

resulting from the continuedexponential growth in the volume of

such information.”

Advisory Committee Note to Rule 37 (2014).

In this District, Rule 37(e)’s void has led tomixed case law on the issue of whether “intent”must be shown in order to obtain sanctions.

Mosaid Technologies Inc. v. SamsungElectronics Co., Ltd.◦ “Actual suppression” of ESI was not required as long

as the loss of information caused prejudice.

Bensel v. Allied Pilots Association, et al.

◦ 269 boxes of documents were destroyed by defendant’sdocument management company during litigation, butthere was no finding of spoliation since there was no“specific evidence of fraud or bad faith.”

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Bull v. United Parcel Service, Inc.,665 F.3d 68 (3d Cir. 2012)

Third Circuit resolves uncertainty

Bad faith is required to show “actual suppression”:

“[A] finding of bad faith is pivotal to a spoliationdetermination. This only makes sense, since spoliation

of documents that are merely withheld, but notdestroyed, requires evidence that the documents are

actually withheld, rather than—for instance—misplaced. Withholding requires intent.”

After Bull, thorny issues remain…

Is prejudice required for ESI sanctions?

Which remedial measure (fees, adverseinference, dismissal) fits the case?

(e) Failure to Provide PreserveElectronically Stored Information. Absentexceptional circumstances, a court may notimpose sanctions under these rules on a partyfor failing to provide electronically storedinformation lost as a result of the routine, good-faith operation of an electronic informationsystem.

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If electronically stored information that should have beenpreserved in the anticipation or conduct of litigation is lostbecause a party failed to take reasonable steps to preserve it,and it cannot be restored or replaced through additionaldiscovery, the court:

◦ (1) upon finding prejudice to another party from loss of the information,may order measures no greater than necessary to cure the prejudice; or

◦ (2) only upon finding that the party acted with the intent to depriveanother party of the information’s use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information wasunfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Under the new version, the court must firstaddress three threshold issues when ESIsanctions are sought:

◦ (1) whether the ESI should have been preserved;

◦ (2) whether the ESI was actually lost because aparty failed to take reasonable steps to preserveit; and

◦ (3) whether the ESI cannot be restored orreplaced through additional discovery.

If all three threshold conditions are met, and thereis a showing of prejudice, then the court “mayorder measures no greater than necessary to curethe prejudice.”

For an adverse inference or an outright dismissal,however, the three threshold conditions must bemet along with a finding “that the party actedwith the intent to deprive another party of theinformation’s use in the litigation” (prejudiceis not required)

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The mere fact that a party lost ESI due to itsfailure to take reasonable steps will not, by rule,warrant an adverse inference or dismissalunless the intent requirement is satisfied.

Advisory Committee: “Intent” for purposes ofthe new rule is more than negligence or evengross negligence.

Advisory Committee Note to Rule 37(2014)

Adverse inference or other sanctions require ashowing that a party acted “with the intent todeprive another party of the information’suse in the litigation”

New rule “forecloses reliance on inherentauthority or state law to determine whencertain measures should be used.”


Analysis applies only to ESI, and only applieswhen such information is actually lost

“[L]oss from one source may often be harmlesswhen substitute information can be foundelsewhere.”

New rule does not create a new duty to preserve


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“The rule does not place a burden of proving ordisproving prejudice on one party or the other.”

“The rule leaves judges with discretion todetermine how best to assess prejudice inparticular cases.”


Clearer guidance for adverse inference, fees, ordismissal

Still, lesser sanctions, such as monetary relief,can be imposed where the three thresholdconditions are met and there is a showing ofprejudice.

Counsel on both sides should nip potential ESIissues in the bud early, by aggressively collectingclient’s data in preparation of forthcomingdiscovery requests.

No better way to avoid e-discovery issues thanbeing able to walk into the initial conferencehaving already performed the necessarysearches.

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Not enough to “trust the client” that thelitigation hold has been implemented.

Regular monitoring of preservationprocedures is a must.

Counsel should be willing to meet in-person with the client’s informationtechnology staff to gain familiarity withinternal preservation systems.

Preservation steps should be documentedby counsel in case the litigation holdprocess becomes an issue later in thecase.

Rule 1

◦ Amended to make clear that the just, speedy, andinexpensive determination of civil actions is theresponsibility of the parties, not just the court

Rule 4

◦ Time to serve defendant after filing the Complaint isreduced from 120 days to 90 days

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Rule 16

◦ Scheduling Conferences are to be permitted in person or bytelephone

◦ Issuance of the first Scheduling Order is reduced from 120days to 90 days after any defendant has been served, or 60days after any defendant has appeared

◦ The first Scheduling Order may provide for thepreservation of ESI, incorporate claw-back agreements, andrequire parties to request a conference before filing adiscovery motion

Rule 26(d)(2)

◦ “Early” document requests are permitted where theyare served more than 21 days after service ofsummons and complaint

◦ The requests are considered “served” at the first Rule26(f) conference

Rule 34(b)(2)(C)

◦ Responses to document requests must indicatewhether anything is actually being withheld on thebasis of an asserted objection

Rule 55(c)

◦ Amended to make clear that a default judgment can berevised at any time until it becomes a final defaultjudgment

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Rule 84 – Forms

◦ Rule 84 and the Appendix of Forms “are no longernecessary and have been abrogated” given “manyexcellent alternative sources for forms”

◦ The “Waiver of Service” form used in connection withRule 4 is now incorporated into Rule 4

QUESTIONS AND ANSWERS

federal discovery in the proportionality era - for brown ... 1 basic principles, ... expense of the...

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